Evolution of Consumers’ Preferences due to Innovation

Rolan Mauludy Dahlan and Hokky Situngkir

MPRA Paper from University Library of Munich, Germany

Abstract: The integration process between evolutionary approach and conventional economic analysis is very essential for the next development of economic studies, especially in the fundamental concepts of modern economics: supply and demand analysis. In this presentation, we use the concept of meme to explore evolution of demand. This study offers an evolutionary model of demand, which views utility as a function of the distance between the two types of sequences of memes (memeplex), which represent economic product and consumer preference. It is very different from the conventional approach of demand, which only views utility as a function of quantity. This modification provides an opportunity to see innovation and transformation of consumer preferences in the demand perspective. Innovation is seen as a change in sequence of memes in economic products, while the transformation of consumer behavior is defined as a change in the aligning memes of consumer preference. Demand quantity is the result of the selection process. This model produces some interesting characteristics, such as: (i) quantitative and qualitative properties of evolution of demand, (ii) relationship between consumer behavior and properties of evolution of demand that occurred and (iii) power law on the distribution of product lifetime. At the end we show the improvement of utility function, in the concept of meme, might create a new landscape for the further development of economics.

Keywords: Evolutionary economics; memetics; demand; evolution; innovation; transformation of consumer behavior (search for similar items in EconPapers)
JEL-codes: D11 D40 D91 E11 E20 L15 L16 O31 O33 (search for similar items in EconPapers)
Date: 2010-07-29
New Economics Papers: this item is included in nep-evo, nep-ino, nep-mkt and nep-upt
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